Legal advice can be a valuable document for the protection of the addressee: (i) by informing the recipient of the legal effect of carrying out the proposed transaction; (ii) identification of legal risks; and (iii) confirmation that either party is capable of contracting and performing its obligations under the transaction documents. A fairly recent study by the ABA`s Business Law Section on private mergers and acquisitions in Canada shows a sharp decline in the number of legal opinions on such transactions. The study, which covered 64 transactions ranging from $5 million to $100 million from January 2010 to December 2011, showed that the percentage of transactions requiring legal advice from the target company`s lawyers increased from 72% in 2008 to 55% in 2011. The decline in the comparable study for U.S. transactions was even more pronounced, from 58% in 2009 to 27% in 2011. A legal opinion is an official letter from your company`s management consultant to investors that contains the advisor`s conclusions on various legal issues relevant to the company and the transaction, based on the consultant`s review of a defined body of documents and information. Common Qualifications for a Notice of Recourse in U.S. Commercial Lending Operations Gail Merel (journalist), A. Mark Adcock, Robert W. Barron, Willis R. Buck, Jr., Jerome A.
Grossman, Louis G. Hering, Timothy G. Hoxie, Andrew M. Kaufman, Reade H. Ryan, Jr., Philip B. Schwartz and Stephen C. Remain; 70(1): 121-160 (Winter 2014-2015) As a condition of entering into many types of business transactions, one or more parties may be required to provide written comments in favour of other parties to the transaction. These opinions are often referred to as «third-party opinions» because the opinion provider conveys them to one or more parties other than the influencer`s own client. These opinions may cover a range of matters, including, but not limited to, the status and authority of the Company, the proper authorization, execution and delivery of transaction documents by the Opinionor`s own client, and the enforceability of such documents against the Opinionor`s own client in the transaction. Discussions about the scope of these opinions and the extent to which they are qualified are often time-consuming, and the resulting costs borne by the client whose lawyer is called upon to provide the expertise increase considerably during negotiations. This article, which focuses on third-party opinions expressed in the context of commercial lending in the United States, examines a number of reservations that, in the authors` experience, are often included by opinion leaders for a variety of reasons and generally accept opinion recipients and their lawyers.
The authors believe that identifying qualifications commonly used and accepted in the U.S. commercial lending market can help streamline the opinion process on many transactions. No to any question. Legal advice is not provided in all U.S. venture capital financings, and they are much rarer in large non-U.S. venture capital jurisdictions. Even in the transactions where they are given, the content is negotiated between the investor advisor and the company advisor and varies somewhat from transaction to transaction. Whether or not an opinion is issued and whether the content of the opinion takes into account the specificities of the company, the transaction and sometimes the investor. This article contains only general information on legal issues and developments and is not intended to be specific legal advice. For more information, please see our disclaimer. Despite the increasing effectiveness of due diligence, the fact remains that some transactions require legal advice due to the particular circumstances of this transaction.
However, the old habit of seeking the advice of a lawyer as a condition of closing and then letting lawyers negotiate the terms of the transaction at a later date may soon become obsolete. A management consultant`s opinion is intended to provide investors with additional comfort with respect to the legal issues covered by the opinion, but does not replace the «due diligence» that must be performed by investors and their legal counsel. In commercial transactions, particularly in the context of financing, the lender requires expert advice on the viability of the borrower and the enforceability of the transaction documents that the borrower must conclude. This type of assessment is generally provided by the borrower`s lawyer or the lender`s advisor, according to the ethical rule that applies to the delivery of these expertises applicable to the jurisdiction.
